Improved economy, one of the factors for property prices?

05:55 AM Sep 17, 2010
by Rachel Adrienne Kelly

SINGAPORE - The recent property-cooling measures are not likely to have a significant long-term impact on the overall real estate market in Singapore, with global economic issues playing a larger role, property experts speaking at an industry seminar said yesterday.

"Generally, the property price is affected by external factors or the growth of the Singapore property prices is because of the improved economy. People's incomes increase, people's wealth increase, that's why they are buying," said Mr Alfred Chia, chief executive of SingCapital, at a forum organized by Propertyguru.com.

However, the Aug 30 property cooling measures are expected to reduce the cash-over-valuation (COV) of HDB resale flats and they will put a damper on demand for the rest of the year.

Market-watchers at the event expect COVs to decline by 10-per-cent this year from current levels, with a further 10 per cent drop next year.

Meanwhile, smaller properties are expected to be at a relative advantage.

"For people with a housing loan and on a tighter budget, they will have to lower their budget to buy another property," said Ms Chua Chor Hoon, head of Research, South East Asia at DTZ.

"That means if originally they were looking at a $1 million house, now they will have to look at something between $500,000 and $750,000 so you will see a shift in demand to smaller units," she added.

While the market adjusts to the new measures, the volume of mass market property sold is expected to decline by 10 per cent from now until the end of the year, according to some analysts' estimates.

No impact is expected in the high-end property market.

Source: http://www.todayonline.com